- The Washington Times - Friday, June 12, 2009


The trouble began far away from the leaky concrete house and stand of banana trees that Sakunthala Radhakrishnan calls home. In 19 years as a textile worker in southern India, Mrs. Radhakrishnan saved enough to buy gold jewelry. She sent money to her parents and fattened up her skinny daughter with fancy energy drinks. And she secured for her child a gift she herself never received: an English-language education.

But seven months ago, the better life her family was crawling toward got yanked out of reach. After the U.S. financial crisis erupted thousands of miles away, the textile factory where she and her husband worked closed because orders dried up and credit tightened.

“It’s a distant dream since I lost my job,” she said. “I suffer mental depression.”

Mrs. Radhakrishnan, 34, and her husband found new jobs as day laborers — she at a smaller textile factory and he as a welder. But their family income has plunged by nearly half, from $160 to $90 a month. Now they could lose their home and have to rely on the government for food.

For years, textile jobs helped tens of millions of Indians like Mrs. Radhakrishnan clamber onto the bottom rungs of the nation’s fast-expanding middle class. Textiles are India’s second-largest source of employment, after agriculture, accounting for more than 35 million jobs - far more than the 2.2 million in India’s high-profile information technology sector.

Now, the global economic meltdown is pushing Mrs. Radhakrishnan and many others back.

The International Monetary Fund estimates that the slowdown already has driven more than 50 million people globally into extreme poverty. In India, slowing growth means at least 3 million people won’t be lifted out of poverty this year, and some of the 200 million who live just above the official poverty line could slip below it, according to the U.N. Development Program.

Experts warn the social damage could be long-lasting, as parents scrimp on medical care and pull their children from school.

“This will affect a generation,” said Ajay Chhibber, assistant secretary general of the U.N. Development Program in New York. “A girl who drops out of school will be an illiterate mother the rest of her life. … You had a financial crisis. It’s now become an economic crisis. The next phase of this in 2009 will be a social crisis.”

Many in the textile belt of south India’s Tamil Nadu state have seen their incomes roughly halved, to about $1.50 a day, as factories hit by declining exports and tight credit cut production, are forced to reduce payrolls and eventually close down. Distribution of government subsidized food in the area has shot up, and people are taking out loans and hocking jewelry to meet expenses.

India’s public schools are notoriously poor, and many parents work hard to send their children to low-cost private schools that teach English. Now they are pulling them out, cutting off the next generation from what has been the surest ticket to a better life in India: the English language.

During the boom years, textile factories in Tamil Nadu’s Coimbatore region could not get enough workers. They sent buses to nearby villages, picking up workers for thrice-daily shifts. In 2005, mills began holding recruitment fairs hundreds of miles away, in Tamil Nadu’s impoverished south. Laborers poured in from poor states such as Bihar and Orissa. Even on $3 or $4 a day, many built houses and put their children in private English-language schools.

Today many of the factory buses have stopped running, and migrants have gone home.

Things started to go bad in 2007, when the rupee appreciated sharply. Next, due to severe power shortages, blackouts began sweeping Tamil Nadu. Factory owners say they still don’t get power for up to eight hours a day.

From 2004 to 2007, textile production in India grew an average of 9.4 percent a year, according to the Confederation of Indian Textile Industry, a trade group. Growth then slipped to 4.9 percent, and in the year ending in March, production actually contracted by 0.3 percent.

The biggest blow was the global financial crisis, which dried up credit and forced Americans to cut back on their shopping. Half of India’s textile production is for export, and the U.S. is India’s largest market, accounting for over 20 percent of exports. In the first two months of this year, textile imports from India were 11.9 percent lower than they were last year, according to the U.S. Department of Commerce.

Declining demand has tightened an already competitive market. Indian companies complain they are at a disadvantage compared to poorer nations such as Bangladesh, which get preferential trade treatment from developed countries.

And there’s no way that India, where just 3 percent of textiles are made at large mills, can compete with China. China accounted for 35.9 percent of U.S. textile imports in the year ending in March, compared with India’s 5.4 percent, according to the U.S. Department of Commerce.

In the last three months of 2008, 27 of India’s largest textile companies reported an aggregate loss of $14.8 million, compared to a profit of $43.1 million in the same period in 2007, according to data compiled by the Southern India Mills’ Association.

Today, most textile factories around Coimbatore — 220 miles southwest of Bangalore — are operating at half capacity, say factory owners and business groups.

The Palladam Hi-Tech Weaving Park, a $13 million export center inaugurated in April last year, is a ghost town. Only 27 of the 92 lime-yellow factory sheds actually opened, and just 14 are operational, said M. Senthilkumar, managing director of BKS Textiles, which owns five units in the park. The rest stand empty, their shutters drawn.

Dormitories to house 3,000 workers have been abandoned, half-finished. The only sound on the park’s Main Street is wind.

Miles away, Gangotri Apparels opened a $68 million factory in 2007. Hulking rooms inside the 52-acre complex are empty. Half the machines are still. Faced with a cash crunch, the company recently managed to restructure its loans and defer interest payments for a year.

Mayank Tibrewal, general manager of operations and son of one of the founders, says the expansion was ill-timed. The fate of his company now hinges on the success of President Obama’s stimulus plans, he said.

“We are all praying that it works,” he said. “Everything is led by the U.S.”

Mrs. Radhakrishnan and her husband borrowed $200 from a moneylender at 24 percent interest to pay their daughter Nandhini’s tuition at an English-language school.

“I want her to become an engineer,” she said. “Definitely not this textile work.”

She pushed the girl forward, urging her to declare her favorite subject.

“English,” said Nandhini, a slim, shy 8-year-old. Then she sang a short, lisping song about butterflies she had learned in class.

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